Australian borrowers could have taken the first rate hike by the Reserve Bank of Australia (RBA) in over a decade as a sign to reconsider their home loans as refinancing activity spiked in May.
Figures from PEXA Insights showed increases in refinancing settlements in New South Wales, Victoria, Queensland, and Western Australia last month.
Of the four states, Victoria recorded the highest growth in refinancing activity at 26.7%, followed by Western Australia (25%), Queensland (21.8%), and New South Wales (20.8%).
|
|
Refinancing Volume |
Growth (%) |
|
|
Monthly |
Annual |
||
|
New South Wales |
10,838 |
20.8 |
15.6 |
|
Victoria |
11,500 |
26.7 |
23.3 |
|
Queensland |
6,699 |
21.8 |
49.6 |
|
Western Australia |
3,244 |
25.0 |
46.1 |
Major banks lost some of their traction in terms of refinancing activity in Victoria, New South Wales, and Queensland to non-major banks.
In Western Australia, major banks were able to grow their share of overall refinancing activity.
The refinancing trend would likely continue to grow further in the context of the expected rate increases over the coming months.
A recent study by Equifax showed that 79% of mortgage brokers are expecting to see volume of loan applications increase despite the overall slowdown in demand.
Equifax general manager James Forbes said the recent rise in interest rates, increasing inflation, and the recently concluded election would likely have a significant impact on all segments of Australian home loan borrowers.
“As a result, we expect to see more churn and greater competition amongst lenders for market share,” he said.
Property investors concerned about rate hikes
Rising rates are not just a pressing issue for indebted owner-occupiers but also to property investors, the latest study by TaxTank showed.
According to the study, 63% of property investors are feeling concerned about the rising interest rates.
A little more than 10% of investors expressed fear that they might have to sell their properties just to ease the pressure arising from the surging cost of living.
TaxTank founder Nicole Kelly said it is crucial for property investors not to panic sell despite the concerns in the current environment.
“Too often, we see clients sell properties based on the wrong criteria because they don’t have the right information,” she said.
“Clients look at the mortgage they need to pay out, and the cash left over, instead of which properties are performing the best in their tax return and what cash is required from their pocket to hold that investment each week.”
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Photo by @bdchu614 on Unsplash
Collections: Mortgage News
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